- According to data monitored by 21.co, over $1.08 billion worth of Treasury notes have been digitized via public blockchain platforms.
- This figure has skyrocketed by almost ten times since January 2023, driven by a global uptrend in interest rates.
The appetite for tokenized U.S. Treasury debt has reached unprecedented heights.
On public blockchains such as Ethereum, Polygon, Avalanche, Stellar, and others, the combined market capitalization of tokenized Treasury notes has surpassed the $1 billion mark for the very first time, as reported by Tom Wan, analyst at crypto-focused firm 21.co.
Understanding Tokenized Treasuries
Tokenized Treasuries are essentially digital proxies of U.S. government bonds, tradable as blockchain tokens. Since January last year, their market value has ballooned nearly tenfold, with an 18% surge following the rollout of BlackRock’s Ethereum-based tokenized fund, BUIDL, on March 20.
Market Leaders and Fund Rankings
At present, BUIDL stands as the runner-up tokenized fund, boasting a valuation of $245 million. It shadows Franklin Templeton’s Franklin OnChain U.S. Government Money Fund (FOBXX), which claims the top spot with $360.2 million in deposits. Notably, each share of FOBXX is represented through the BENJI token.
“Just hit a milestone: $1B total in tokenized U.S. Treasuries circulating on public blockchains,” Wan tweeted on X. “In just one week, BlackRock’s BUIDL supply ballooned by 400%, from 40M to 240M tokens. OndoFinance now holds the largest stake in BUIDL, owning 38% of the total tokens. On top of that, Ondo’s OUSG fund is fully collateralized by BUIDL.”
Interest Rates Propel Token Demand
The swift ascent of Treasury yields over the last two years has acted as a catalyst for the growing enthusiasm surrounding their tokenized counterparts. The 10-year Treasury yield, often regarded as the benchmark risk-free rate, has climbed to 4.22% from 1.69% since March 2022. This shift has dulled the attractiveness of borrowing and lending dollar-pegged stablecoins within decentralized finance arenas.
Additional Insights:
Since the Federal Reserve began tightening monetary policy in 2022, the 10-year yield’s steady climb has prompted many investors to reconsider traditional stablecoin strategies in favor of assets anchored to U.S. government debt. Tokenized Treasuries now draw interest as a more reliable store of value within crypto portfolios.
Benefits for Crypto Investors
For digital asset holders, tokenized U.S. Treasuries offer a handy tool for diversifying holdings. Furthermore, their blockchain base enables instantaneous settlement any time of day, freeing investors from the constraints of traditional market hours.
“What’s really cool about tokenization is the ability to settle transactions around the clock,” remarks Wan, emphasizing the operational flexibility this innovation brings.
